Correlation Between Fidelity Freedom and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Massmutual Retiresmart at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Freedom and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2025 and Massmutual Retiresmart 2025, you can compare the effects of market volatilities on Fidelity Freedom and Massmutual Retiresmart and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Freedom with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Massmutual Retiresmart.
Diversification Opportunities for Fidelity Freedom and Massmutual Retiresmart
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Massmutual is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2025 and Massmutual Retiresmart 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Fidelity Freedom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Freedom 2025 are associated (or correlated) with Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Massmutual Retiresmart
Assuming the 90 days horizon Fidelity Freedom is expected to generate 1.25 times less return on investment than Massmutual Retiresmart. In addition to that, Fidelity Freedom is 1.35 times more volatile than Massmutual Retiresmart 2025. It trades about 0.18 of its total potential returns per unit of risk. Massmutual Retiresmart 2025 is currently generating about 0.31 per unit of volatility. If you would invest 1,118 in Massmutual Retiresmart 2025 on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Massmutual Retiresmart 2025 or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity Freedom 2025 vs. Massmutual Retiresmart 2025
Performance |
| Timeline |
| Fidelity Freedom 2025 |
| Massmutual Retiresmart |
Fidelity Freedom and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Massmutual Retiresmart
The main advantage of trading using opposite Fidelity Freedom and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Massmutual Retiresmart can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Massmutual Retiresmart will offset losses from the drop in Massmutual Retiresmart's long position.| Fidelity Freedom vs. Fidelity Freedom 2015 | Fidelity Freedom vs. Fidelity Freedom 2005 | Fidelity Freedom vs. Fidelity Freedom 2035 | Fidelity Freedom vs. Fidelity Freedom 2020 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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